Annotated Bibliography 5

Benston, George J, et al. "Bank Capital Structure, Regulatory Capital, and
     Securities Innovations." Journal of Money, Credit, and Banking 25.3 (2003):
     301-322. Print.

Trust preferred securities (TPS) have no maturity date and also have a mandatory redemption feature.  TPS became extremely popular in the late 1990s and many companies were only offering these forms of securities by 2000.  TPS have a large tax advantage over normal equity and ordinary preferred stock.  Bank holding companies (BHCs) were predicted not to benefit from issuing TPS.  The banks were doing well during the period of research referred to in the article therefore, the stock prices did not decline in the way they were predicted to and therefore investors came out alright. Some BHCs did not loan TPS because the benefits would not outweigh the costs of transactions.  These long term securities have several benefits to them and are legal to issue, this is an example of what securities were being sold to investors before the scandal in 2008 involving Goldman Sachs.  This can be another example of a solution to the Goldman Sachs scandal, the sale of securities such as these, which are legal, to investors would profit the company and its investors.  This can be related to the securities which Goldman did sell and I can compare the two and see the differences between the two. The sale of these securities would have been a more moral choice for Goldman Sachs, though they may not have earned as much profit.